Looking for Home Equity Lines of Credit in Ontario?

360Lending is an award-winning mortgage brokerage based in Richmond Hill, Ontario. Over 2,000 homeowners in Ontario have given us 5-star reviews and we have an A+ rating from the Better Business Bureau.

We help homeowners get the lowest rates for home equity loans, home equity lines of credit, refinancing, and other mortgage products.

To get approved for a HELOC, click here to schedule a call with our team.

If you're a Canadian homeowner and you're feeling weighed down by high-interest debt, a HELOC might have come up. A Home Equity Line of Credit is a popular way to access your home equity without selling your house or refinancing your entire mortgage. But is it a good idea to use one to pay off debt?

Let's look at how HELOCs work, the pros and cons of using one to consolidate debt, how they compare to other options, and how to actually get one in Ontario.

How Does a Home Equity Line of Credit Work?

A HELOC is a type of secured credit line. It lets you borrow money using your home as collateral. Your lender sets a credit limit based on your home’s value and how much equity you have. From there, you can withdraw funds whenever you need them — and only pay interest on what you use.

Let’s say your home is worth $800,000 and your current mortgage balance is $500,000. That gives you $300,000 in home equity. A lender may let you access up to 65% of your home’s value through a HELOC, which in this case could be around $20,000 to $40,000 depending on your full financial profile.

HELOCs work a lot like a credit card:

You can borrow, repay, and borrow again.

You’re charged interest only on what you use.

Unlike personal loans or second mortgages, you’re not locked into fixed payments. That gives you flexibility, but also means you need to stay on top of how much you borrow.

Benefits of Using a HELOC to Pay Off Debt

If you’re carrying high-interest credit card balances or personal loans, using a HELOC to pay them off can offer a lot of advantages — especially if you’re disciplined about repayment.

1. Much Lower Interest Rates

This is the big one. While most credit cards in Canada charge between 19% and 24% interest, a HELOC usually offers rates in the 7% to 9% range, depending on the lender and your credit. That can add up to hundreds (or even thousands) of dollars in savings.

2. Lower Monthly Payments

By swapping out high-interest debt for a lower-rate HELOC, your monthly payments can drop significantly. That frees up cash in your budget and makes repayment more manageable.

3. One Simple Payment

Consolidating multiple credit cards or loans into a single line of credit can simplify your life. You’ll have just one balance to manage, one interest rate to track, and one monthly payment to make.

4. Flexibility

Because it’s a revolving credit line, a HELOC lets you borrow as much or as little as you need — and reuse the credit if something unexpected comes up. That flexibility can be useful during periods of financial recovery or transition.

Risks of Using a HELOC to Pay Off Debt

While a HELOC has clear advantages, it’s not the right move for everyone. If you're not careful, using home equity to pay off debt can backfire.

1. It Doesn’t Fix Spending Habits

Consolidating debt only helps if you don’t run up new balances. Unfortunately, some borrowers pay off their credit cards with a HELOC — and then start using the credit cards again. This can lead to a dangerous cycle of growing debt that becomes harder to escape.

2. Your Home Is on the Line

A HELOC is secured by your home. If you miss payments or default, the lender has the legal right to take action — including forcing the sale of your home. That’s a big risk, especially if your income isn’t stable or you already struggle to manage debt.

How About Unsecured Personal Lines of Credit?

An unsecured line of credit is another option for consolidating debt. The key difference is that you don’t need to use your home as collateral — which means your house isn’t at risk.

This sounds safer (and in many ways, it is), but there are trade-offs:

Higher interest rates: Usually between 10% and 14%, depending on your credit score and income.

Lower limits: You may not be able to borrow as much as you could with a HELOC.

Stricter approval rules: You’ll need strong credit and steady income to qualify.

Unsecured lines of credit can be a better choice if you’re only consolidating a small amount of debt, or if you don’t feel comfortable using your home as security. But for larger balances, a HELOC often comes with lower payments and better long-term savings.

How to Get a HELOC to Pay Off Debt in Ontario

If you’re considering using a HELOC to pay off debt, here’s what the process looks like — especially in Ontario, where most homeowners deal with big banks and strict lending rules.

1. Major Banks Require You to Have Your Mortgage With Them

Most of Canada’s major banks — like TD, RBC, Scotiabank, BMO, and CIBC — offer HELOCs. But here’s the catch: they usually only approve a HELOC if your first mortgage is already with them. If you have your mortgage with another lender, they may ask you to move your mortgage over, or decline your application entirely.

This can be frustrating if your mortgage is locked in at a great rate or has a penalty for breaking early.

2. Use a Mortgage Broker to Find More Options

If your current bank can’t help, or you don’t want to refinance your mortgage, a licensed mortgage broker can help. Brokers work with a wide range of lenders — including non-bank lenders that offer standalone HELOCs.

They’ll review your financial situation, help you understand your borrowing power, and connect you with lenders who are more flexible than the big banks.

3. Gather Your Documents

To apply, you’ll need to show basic financial info, including:

A recent mortgage statement

Your property tax bill

Proof of employment or self-employment income

A list of your current debts

Having everything ready up front can speed up the process and improve your chances of approval.

4. Broker to Arrange an Appraisal

Lenders will require a home appraisal to confirm your property’s market value. Your broker will set this up with an approved appraiser. The appraisal helps determine how much equity you have, and what your HELOC limit might be.

The entire process — from application to approval — usually takes 1 to 2 weeks, depending on how quickly your documents and appraisal are completed.

How Much Can You Borrow With a HELOC?

The amount you can borrow with a HELOC depends on how much equity you’ve built up in your home. In Canada, lenders typically allow you to borrow up to 65% of your home’s current market value through a HELOC.

Some lenders will allow you to go as high as 80% loan-to-value (LTV) if you combine your HELOC with your mortgage under a readvanceable product — but the HELOC portion itself is capped at 65%.

Here’s how that might look in practice:

Your home is worth $700,000

65% of that is $455,000

You owe $400,000 on your mortgage

You may be able to borrow up to $55,000 through a HELOC

Keep in mind that every lender has different policies. Some might be more conservative, especially if you have lower income or weaker credit. Your mortgage broker can help you calculate your specific borrowing power based on your home, your mortgage, and your finances.

Getting a HELOC With Bad Credit in Canada

Here’s some good news: you don’t need perfect credit to get a HELOC. While major banks will often require a credit score of 680 or higher, some alternative lenders and private lenders are willing to approve borrowers with scores in the 500s or low 600s.

If your credit score is lower, here’s what to expect:

You may pay a higher interest rate — still lower than credit cards, but higher than a traditional HELOC from a bank.

You may need to have more equity — for example, lenders may want you to have at least 30% to 40% equity in your home.

You may face tighter borrowing limits — depending on your income and credit history.

Even with a higher interest rate, a HELOC from a non-bank lender can still be worth it if it helps you consolidate high-interest debt. For example, even a 12% interest rate on a HELOC is much cheaper than carrying credit card debt at 22%.

Alternatives to Using a HELOC to Pay Off Debt

Aside from getting a HELOC, it’s worth looking at other options. Here are a few to consider:

1. Home Equity Loan (Second Mortgage)

A second mortgage is a lump-sum loan secured against your home. It has a fixed interest rate and a set repayment term — which makes it more structured than a HELOC. This is a good option if you want discipline built in.

2. Mortgage Refinance

If interest rates are low and you have good credit, refinancing your entire mortgage might allow you to roll your high-interest debt into your new mortgage. This gives you a lower rate and spreads the payments over a longer period.

3. Consumer Proposal

If your debt load is too high to manage, you may want to talk to a licensed insolvency trustee. A consumer proposal allows you to settle your unsecured debt for less than you owe, without losing your home.

Is It a Good Idea to Get a HELOC?

In many cases, yes — a HELOC can be a smart and cost-effective way to consolidate debt, especially if you own a home and have built up some equity. The lower interest rates and flexible repayment can help you save money and simplify your finances.

But it’s not a free pass. Your home is on the line, so it’s important to treat this option with care. A HELOC is a tool — and like any tool, it can be helpful or harmful depending on how you use it.

Before you move forward, speak with a licensed mortgage broker who can explain your options, assess your financial situation, and help you avoid common pitfalls.